• The crypto market has grown fast, and now companies offer crypto loans.
• Loans in digital currencies generate an alarm in US banks.
Crypto loans have become popular within the financial market. Companies that provide loan services in digital currencies have caused panic in the banking and put regulators to work.
Flori Márquez, BlockFi Founder, said that her platform is just getting started on this important topic. BlockFi is a financial platform created in 2017 and is based in Jersey. This platform has had rapid growth within the cryptocurrency market and has close to $10 billion in digital assets.
Its headquarters is across the famous Hudson River from Wall Street, and it wants to turn into the JPMorgan of digital currencies. BlockFi claims to have 850 employees and close to 450,000 retail clients. This company offers its clients crypto loans in a few minutes and does not require a credit check.
BlockFi, the platform that offers crypto loans
The BlockFi platform offers different financial services such as interest-bearing accounts, crypto loans, and credit cards. The great difference of this financial start-up is that it operates in the crypto market. It is considered one institution to generate an effective banking system using cryptocurrencies.
Some federal officials have warned that the crypto market can be a problem for the financial industry and is susceptible to hackers in recent interviews. The crypto financial services industry relies on risky innovations.
Senior federal officials and banking regulators have worked on the issue and caught up with the market’s rapid move. They have started to study and discover how to curb the potential risks of this new and volatile industry, such as cryptocurrencies.
For banks, the cryptocurrencies adoption is a sign of alarm
For financial regulators and government officials, the cryptocurrencies entry into banking is a sign of warning. The crypto market and technology are advancing so rapidly that regulators have lagged. This advance and crypto loans leave financial markets, investors, and consumers at risk.
In August, the PolyNetwork platform was hacked, losing almost $600 million of its client’s assets. The platform returned part of the assets after the financial platform founders requested the cybercriminals to back off.
The financial services platform BlockFi has been in the regulator’s crosshairs in 5 states. Regulators’ concerns are on the lookout to prevent securities laws from being violated. They know new offers made by companies like PancakeSwap, which offer their users up to a 91 percent return a year on crypto deposits.
Janet L. Yellen, Secretary of the Treasury, is concerned about these crypto loans and their increase in the last few months, even when central banks want to issue their digital currencies.